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Grain Comments: 02-20-2024

Good morning.

Ag markets are higher at the CBOT to start the new week, as soybean futures have come out of the three-day weekend with a gap-higher open. Rumored Chinese purchases of 4-5 cargos of Brazilian beans late last week have lifted Brazil export bids and have also likely lifted US futures prices. Corn futures are 2-3 cents higher; soybean futures are 7-9 cents higher, and the Chicago wheat market is mixed/unchanged. Products are mostly higher, bean meal is up $2.5-3.5/ton, and bean oil is up 25-35 points. Outside markets are mostly lower, crude oil futures are down around 80 cents/bbl, the Dow Jones index is down 100 points, and the US$ index is down 10 points.

Fundamentals in the ag space remain mostly the same following the long President’s Day weekend. With funds as short as they are, the market will be subject to bouts of profit-taking bounces in the coming weeks.

March soybean futures left a gap from 11.73 3/4 to 11.76 on last night’s open; and barring today’s trade, the market now has gaps both above and below the market.

Friday’s COT report showed traders continued to add to short positions in the week ended February 13th in both corn and soybeans but were buyers in wheat.

Funds are now seen short 314,341 contracts of corn, 134,500 contracts of soybeans, and 55,672 contracts of wheat. This is their second largest corn short position of all time, and funds have been sellers of corn now for seven consecutive weeks.

In soybeans, funds have been sellers for 13 consecutive weeks (a record) and are at their fifth largest short position of all time.

USDA announced Friday that weekly export data showing large increases in week-to-week pork exports was an error and will be corrected this week.

The EPA announced over the weekend that it is likely to back a climate model that will make it more difficult for US ethanol producers to qualify for SAF (sustainable aviation fuel).

In global ag news, the Romanian port of Constanta reported a 56% increase in grain handlings from the year prior. This despite Ukraine volumes decreasing by 36% in the same period.

Polish farmers have taken their complaints to the WTO regarding Ukraine imports into their country. By the end of the week, the Polish government plans to publish a list of companies who imported Ukraine grains.

Also, out of this part of the world, prominent Putin critic Alexei Navalny, who was in prison, died Friday evening while in custody. Questions are circulating as to his cause of death.

Farmers in Greece this week plan to join their EU counterparts in government protests. Complaints are centered on rising angry costs, competition from abroad, and recent flooding.

Soybean harvest in Brazil has reached roughly 30% complete as of last week, which is around 5% ahead of average. Summer corn harvest has also reached nearly 30%, which is ahead of average as well.

In financial news over the weekend, Capital One and Discover announced a merger deal that would create a global payment giant. The deal would form the 6th largest US bank by assets and is expected to receive intense antitrust scrutiny.

Also in the financial sector, China announced over the weekend a reduction in its five-year prime loan rate, which is a benchmark for home loans, to 3.95%, down from 4.2% previously.

In the Middle East, the Houthis have claimed attacks on at least four more vessels since Friday. A Lebanese flagged cargo vessel, the Rubymar, was in danger of sinking in the Gulf of Aden, and its crew had abandoned the ship.

Israeli forces continue to push through the Southern Gaza city of Rafah, as the US has proposed a new temporary ceasefire proposal to the UN. Egypt denied claims over the weekend that they were preparing areas on their side of the border to accommodate Palestinians.

Argentina saw limited shower activity over the weekend, and a front is expected to move through next Sunday into Monday. General dryness remains in place in the meantime.

Brazil saw heavy rainfall over the weekend in the North, with Southern areas seeing isolated showers. With safrinha corn mostly planted and soil moisture deficits still in place, heavy rain is welcome.

The US continues to see above average temperatures for most of the Midwest; a storm system is expected to move through from the West coast by mid-week, otherwise dryness is likely for most of the area. Chatter has begun regarding early field work, with planting started in parts of Texas. Spring ’24 is fast approaching.

Have a great day!

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